Talks boost hopes for BA alliance

Sunday 20 January 2002 00:00 BST

THE long-awaited alliance of British Airways and American Airlines has moved closer with the news that US and British government officials are finally to meet for crucial talks on an Open Skies agreement.

A link-up between the airlines will depend both on their success on January 28 and an exemption from US anti-monopoly laws. But BA is confident that the talks will be successful and that a deal between the airlines will follow next month.

Open Skies means more carriers will be able to fly between Britain and America, which will lead to a greater choice of flights and, possibly, lower fares. BA is also expected this week to announce closer links with Dutch carrier KLM.

Despite breaking off merger talks in 1999, they are still keen to forge an alliance. But political and legal barriers are expected to limit any deal to co-operation and market-sharing on Middle East flights.

Also on the BA agenda is a massive reduction of its European routes in a strategic review to be announced next month. Reports of a rift between chief executive Rod Eddington and veteran chairman Lord Marshall over the future size and shape of BA have been denied.

Meanwhile, an obstacle to a BA-AA tie-up looms in Europe. A European Court of Justice ruling due to be handed down at the end of the month could give the Brussels European Commission full negotiating powers over the use of EU airspace.

This would overturn the series of bilateral Open Skies agreements struck between various EU governments and the US. And down with them would go all hope of the Open Skies deal between Britain and America on which a BA-AA alliance hinges.